REPORT OF THE COMMISSION

This cause came on for hearing before the Commission on February 19, 1982 at 9:00 a. m., upon the application of Coseka Resources (U.S.A. ), Ltd., for the designation of the Mancos "B" formation underlying certain lands in Rio Blanco County, Colorado, as a "Tight Formation", pursuant to Section 107 (b) of the Natural Gas Policy Act of 1978 (15 U.S.C. 3317) and the regulations thereunder, and Coseka, having appeared in support of its application, and no on e having appeared in opposition, and the Commission having heard the testimony and evidence presented;

The Commission finds as follows:

1. Notice of the time, place and purpose of the hearing has been given as required.

2. The Commission is the jurisdictional agency pursuant to the rules in Docket No. RM 79-76 of the Federal Energy Regulatory Commission., and has jurisdiction over the subject matter of Coseka's application.

3. The area of concern is located within the Douglas Arch area in western Colorado, with the town of Rangely on its northern boundary. It is bounded on the west by the Utah state line and is contiguous to the areas on the east and south in which the Mancos "B" formation has been previously designated a "Tight Formation" (NG-5, NG-6 and NG-14). There are approximately 117,000 acres in the area, 87% of which are federal lands and 13% fee lands. There are no state lands.

4. The Mancos "B" formation, of upper Cretaceous Age, underlying this area is an extension of the formation underlying the areas previously designated. The source of the formation was to the west and it was deposited in a marine environment far removed from the shoreline. The formation consists of fine grained sandstone with large amounts of clay and calcite cement. Shale laminations occur throughout. The average depth to the top of the formation is a pproximately 3009 feet.

5. Engineering testimony presented at the hearing indicates that:

a. The average in-situ gas permeability throughout the pay section is not expected to exceed .1 millidarcy.

b. The stabilized production rate., against atmospheric pressure, of wells completed for production from said Mancos "B" formation at an average depth of 3009 feet, without stimulation, is not expected to exceed a maximum allowable production rate of 91 MCF of gas per day.

c. Hydrocarbons usually do not exist as a liquid in said Mancos "B" formation reservoir. No well is expected to produce more than five (5) barrels of crude oil per day.

6. Typical casing design of wells drilled in the area protects fresh water aquifers in the area as required by the rules and regulations of the Oil and Gas Conservation Commission of the State of Colorado.

7. In view of the above findings, all the criteria required by the Federal Energy Regulatory Commission pursuant to the interim rules in Docket No. RM 79-76 have been met; therefore, a recommendation should be made that the Mancos "B" formation underlying the area below described should be designated a "Tight Formation".

ORDER

NOW, THEREFORE, IT IS ORDERED, that the Colorado Oil and Gas Conservation Commission recommends that the Mancos "B" formation underlying the following described lands in Rio Blanco County, Colorado, be designated a "Tight Formation" and incorporated in the list of "Tight Formations" established pursuant to Rule 271. 706 of the Federal Energy Regulatory Commission:

Township 1 North, Range 101 West, 6th P, M. Sections 17 thru 20, 29 thru 32

Township 1 North, Range 102 West, 6th P. M, Sections 7 thru 9, 13 thru 36

Township 1 North, Range 103 West, 6th P. M. Sections 1 thru 36

Township I North, Range 104 West., 6th P. M, Sections I thru 3, 10 thru 15, 22 thru 27, 34 thru 36

Township i South, Range 102 West, 6th P.M. Sections 1 thru 10, 16 thru 21, 28 thru 33

Township 1 South, Range 103 West., 6th P. M. Sections 1 thru 36

Township 1 South, Range 104 West, 6th P. M. Sections I thru 3, 10 thru 15, 22 thru 27, 34 thru 36

Township 2 South, Range 102 West, 6th P. M. Sections 4 thru 6

Township 2 South, Range 103 West, 6th P.M. Sections 1 thru 6, 17, 18, 20, 29, 32, 33

Township 2 South, Range 104 West., 6th P. M. Sections 1 thru 3, 10 thru 15 ENTERED this 18th day of March, 1982, as of February 19, 1982.

OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO

By Frank J. Piro, Secretary